Forex

Biggest Mistakes in Forex Trading and How to Avoid Them

January 15, 2020 By Susan Paige Leave a Comment

Forex is the biggest financial market in the world, and thanks to its low barrier to entry, it attracts a lot of new investors. With a computer and access to the internet, you only require a few bucks to start trading. But how many forex traders are truly successful? Well, not so many. A low barrier to entry is not a promise of sure or quick profit. Mistakes in forex trading are made by everyone, from beginners to veteran traders. We learn from mistakes, but it is even wiser to learn from other people’s mistakes.

Here the biggest mistakes in forex trading.

Lack of trading education

Starting trading without any education on forex trading is a common and the biggest mistake by new traders. Many beginners think that a good trading strategy is all they need to start trading. Trading education is necessary if you want to succeed.

Let’s say your friend needs surgery. Watching lengthy and detailed surgery documentaries will not enable you perform surgery on your friend. Of course not! Only a surgeon can help. Just like surgeons invest in education, forex traders should invest in trading education. Most newcomers only read a few articles and books about trading before they begin trading. Additionally, they don’t practice enough.

Learn to walk before you can run.

Learn the basics first before thinking about getting rich quickly. Forex trading is complex and requires time to master. Invest in good trading education. Study hard, attend trading seminars, watch webinars, and practice on a demo account. If you don’t have time to learn, find ways to create time. It will not only help you earn profits but also save money in the long run by understanding the markets better and adopting good trading habits.

Trading without a plan

Failing to plan is planning to fail. Almost everything requires planning; otherwise, it becomes difficult. Trading without a plan is not difficult; it is impossible. Lacking a trading strategy is like telling the market to take your money.

A trading plan consists of rules that you strictly follow, as well as money management strategies. How will you cut your losses if the market moves against you? When will you take the profit if the market moves in your favor? It would be best if you determined such levels in advance.

Trading is important only when followed to the letter. You see, almost every trader has a trading plan. The problem is most traders don’t follow their trading plans. Most will start with a trading plan but eventually end up trading based on emotions and instincts. Strong views are okay, but knowing where to enter and exit is important.

Choosing the wrong broker

Depositing your money with any forex broker, you come across online could be a grave mistake. Depositing that money with a broker is the biggest trade you make in forex trading. You could lose it all if your broker is a scam, is in financial trouble, or your money is poorly managed.

Take time to compare forex brokers before choosing one. Consider what you want to accomplish, the services a forex broker offers, and use reliable sources for forex brokers referrals.

Trading without a Stop Loss

Even though sometimes you might be sure of your profit targets, it is good to set a Stop Loss. Forex market is very volatile, and sudden news can have a big impact. A Stop Loss is where your trading strategy is invalidated. A Stop Loss gets you out of a trade if the price moves against you by a specified amount.

Using extreme leverage

Margin trading and leverage are amazing tools that help you invest more money than you have in your forex account and potentially earn more profit. It amplifies your earnings. But it is a double-edged sword as it also amplifies your losses if the market moves in an unintended direction. Using excessive leverage can easily wipe out your trading capital even in case of a small movement against your position.

Taking several trades that are correlated

Diversification is good, and taking multiple day trades is a good way to spread the risk. What many traders forget is that those pairs may be correlated, so they end up increasing risk instead of spreading it. If you notice a similar setup in several pairs, chances are they are correlated. This implies that the pairs move together. You can, therefore, lose or win all of them at the same time. If you believe in diversification, make sure the pairs move independently.

Risking more than you can afford to lose

Risk management strategies are important in forex trading. You must not risk more than you can afford to lose. A Stop Loss is not the only thing you need to cap your losses. There are other things to consider:

Use Stop Loss and Take Profit orders. This way, you know in advance the money you can lose or earn in a trade.
Even with a Stop Loss order, you can still lose a significant amount of capital on a bad day. For this reason, you should set a maximum loss per week.
Never change your risk level immediately you start earning profit.
Never average up/down when the market moves against your position
Never risk more than 2% of your trading capital on a single trade

Keep on trading even when you keep losing

You should stop trading when your win-rate is below 50%. A win-rate is the number of times you win expressed as a percentage. Let’s say you win 55 trades out of 100. Your win-rate is 55%. If you keep losing and your win-rate falls below 50%, close your shop for the day and wait for the next day.

Endnote

You will definitely make mistakes when trading. However, if you can avoid the above common mistakes, you are likely to become successful quickly. More importantly, learn from your mistakes.

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Know about Forex Brokers and the Best Firms to Deal With!

April 12, 2018 By Susan Paige Leave a Comment

With uncountable trading alternatives now coming up, Forex brokers are the firms which provide the currency traders with all sort of access to the trading platform which facilitates them to purchase or sell the foreign currencies. Generally, any currency trading broker is also known by the name of retail forex broker, or the forex broker which handles very less portion of the volume, which arises of the overall foreign exchange market. The currency traders make the use of these brokers to have an access of the currency market, 24X7! Thus, the term Forex brokers is itself carries great virtue and assimilated power to bring in the best trading alternatives for the people.

Forex brokers- breaking down

The Forex brokers are generally compensated in two major ways. The first method includes bid ask spreading of the currency pair. For instance, any retail forex broker might purchase the Euros for around 1.2010 U.S. dollars but at the same time, he can also sell up the Euros costing around 1.2015 U.S. dollars. Thus, in such a case, the spread goes to be around $0.0010 or 10 pips. In eth second alternative, brokers might certainly charge a fee which is levied on every transaction. Although, the heavier competition in the world of forex brokers has largely increased in the past few years, which also has witnessed a lot of individuals to offer the transactions either for free or at minimal cost.

The Forex brokers keep a lot of things in their mind before they plan to deal or trade. They might require the customers to deposit the amount within their accounts that would act as collaterals. However, with the policy of leverage, the customers could also trade in huge amounts than what they have actually got deposited in their accounts. So, whatsoever may be the reason, trading through Forex brokers is actually a fruitful deal which enhances and shines bright with time.

Some major companies dealing with forex brokers

The Forex brokers or CFD who work around the brokerage firms has got immense potential in every sector of the economy and in every market. A lot of experienced firms have now turned their heads towards this place and are giving their professional services to the people. the brokers or the firms come up with different policies and thus, are chosen by the people based upon the priorities. Some may serve with great leverage; however others might operate for longer in the market and ask for a nominal deposit. Thus, all such factors affect the choice of the people.

Some of the wells known Forex brokers firms include, BDSwiss, CMC Markets, Hantec Markets, Swiss Markets, Windsor Brokers, Dukascopy EU, IC Markets, Vipro markets, InterTrader, InstaForex, ETX capital, HotForex, Iron FX and a lot more. You can get acquainted with any of these firms after having the full proof understanding of how they function and what all services do they provide to their customers.

There is probably a lot more which these platforms could bring for you. to get further information, get connected with Forex brokers today! Finally, using pivot point calculations to determine potential turning points is a good strategy. Using pivot points will enable your broker to determine when market sentiment goes from bullish to bearish or the other way around. There are many different variations of pivot point types that can be incorporated into your trading strategy.

How to Start Trading Online

March 9, 2016 By Alexa Mason 2 Comments

A person that considers trading online, whether it’s with stocks or bonds or even into commodities, realizes that there is quite a learning curve that they must go through. It is difficult to assess what needs to be done, and then find a way to get the funding that you will need to start making your trades. Instead of spending your money right away, if you really want to be successful, it’s important to practice without using any of your own existing capital. Here is how you can start successfully trading online using these proven strategies that can help people get started in the right way.

Where Should You Begin With Trading Online?

If you want to start with trading online where most people have the most luck, it is definitely a good idea to start with the Forex market place. This is where about 5 trillion dollars are traded every single day. You can tap into this amount, and as long as you understand how to make the trades, and also know which direction the market is going in using proven algorithms, you can start to make quite a bit of money doing day-trading. It is recommended that you start an account where you can begin to trade on your own without the use of any money at all. You can take advantage of all of the software programs that the company will have, and when you are ready, you can use one of their brokers to start making actual cash flow.

Things To Be Careful About When Trading Online

There are several things that you need to be careful about such as doing at least a few weeks of practice trading before you begin. Instead of just using what is available on the website where you have set up your test account, you should invest in some type of investment program. You can see what others have done in the past, how successful they were, and what strategies actually work the best. The more current version of this training, the more likely it is that it will still work today, helping you to become successful trading not only for X, but any other type of stocks or commodities online. There are different programs out there for each venue, making sure that you will have all of the latest information on how to become a successful trader. It is just easier to work with day-trading platforms, such as Forex, because of the high success rates associated with this particular form of online trading.

Your ability to succeed will only be limited by the amount of time that you spend preparing for using actual currency to trade. You simply have to choose the best combination of currencies, and decide which way the market is going to go, before controlling them. As long as you are able to choose the right direction, and do so consistently, you should have a very profitable way of investing your money. This has happened for thousands of people, and it can happen for you, once you start to do trading online.

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